ubuntu > whereis gem
gem: /usr/bin/gem1.8 /usr/bin/gem /opt/ruby-enterprise-1.8.7-2010.01/
bin/gem

As Ivan suggested, i think its a rubygems problem. I havent installed
rubygems in the REE. Currently it is installed only in normal ruby.
I will install rubygems in REE and uninstall from normal ruby and then
check. Basically keeping only REE.

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